Even though this article pertains to issues outside of résumé writing, I thought it might be food for thought and eventually lead many of us to realization of a better lifestyle, perhaps while contemplating or getting a new résumé. While a great résumé certainly helps you get interviews and potentially a job, it can do little good if no jobs are available, to match your SKA’s (Skills, Knowledge and Abilities). That is what prompted this article.

Reading the latest information on jobs, marketing, managing, and economics, is a part of my day, every day. As a resume writer and copywriter, I feel I have to be knowledgeable in all these areas, as well as others. Each day I receive and review various periodicals dealing with a broad range of these issues. While many of the articles are less than captivating, some rise to excellent levels.  This is especially true for an article by Dr. Hans Sennholz, who is an economics educator and writer.

The article by Dr. Sennholz indicates that off shoring jobs or moving them to the lowest cost area of the world is good for all of us. Now like many of you, I lost my job indirectly to off shoring and the economies of scale. So, when the good doctor, said we all benefit, I started looking for a straightjacket for him.

However, most of what he said was accurate so for as economic forces are concerned. Also we all enjoy low prices for goods and services. This should be very obvious as you do your Christmas shopping and see the parking lots full of cars at discount stores like Wal-Mart. However, what Dr. Sennholz, like most other proponents of off shoring, failed to give any consideration to was, how to maintain high economic standards for the countries losing jobs. It is easy to move jobs and facilities, when compared to moving people. So, when jobs leave an area, people become jobless. Lives are destroyed or forever altered. Rapid economic decline can quickly follow.

Dr. Sennholz makes the point that work should be done by those best-equipped and positioned to do it. From my experience, the average worker in this country is as creative, adaptive and intelligent as workers in any other part of the world. American workers for the most part are as productive, if not more so, than workers in any other part of the world. The only difference between the American worker and his brethren around the world is the American's inflated value.

Now bear with me, just a bit longer, and I think you will see I mean this in a good way. When government needs more money to fund pork barrel spending for useless programs, or perhaps to wage wars that should never have involved the United States anyway, taxes are raised. Now, there is a limit to just how much taxation the American taxpayers will countenance. So, instead of starting a taxpayer’s revolt, government raises the minimum wage.

And I bet all along you were thinking Uncle Sam was doing this out of pure benevolence. Satire aside, the truth is that every increase in minimum wage has created a windfall of additional taxes for government. But did your purchasing power go up. Maybe for a few weeks until prices for everything were raised to ensure companies lost no profits.  And rightly so, since only profitable companies can afford to hire and pay workers.

Over the years, the result of this practice has been to inflate the value of the labor required to produce a product. In other words, when you received a boost in pay due to a minimum wage increase, you didn’t suddenly become more productive. If you were required to produce a hundred widgets per hour before the increase, you probably didn’t have to suddenly produce 116-1/2 widgets per hour, after the increase.

I probably am revealing my age by this comment, but when I first entered the workforce, the minimum wage was around one dollar per hour. Now the federal minimum is over five times that amount. Some states have even raised it higher. Yet, the productivity of the American worker has not kept pace.  The value of the job I did back when I joined the workforce, is still about one dollar per hour, which however, is being paid to someone in a third world country.

This same insanity also ruled back several decades, when powerful labor unions backed by spineless politicians imposed outrageous wage requirements and automatic wage increases, for workers in manufacturing companies like automakers. Most of these increased wages were not supported with higher production, but to the contrary saddled American factories with lower output, and maintenance of jobs, which should have been eliminated. Eventually the demise of the economic viability of the U.S. auto industry and many others can be linked to these same inflated wages in relation to the rest of the global economy.   

The inflated value of employees has certainly been carried to extremes in the case of top executives at companies such as Enron, etc. Most of the growth, experienced in the companies paying out millions per year in salaries to top executives, not including all the other perks, could have been provided by skilled acquisitions managers being paid less than a tenth of that income. Most of the growth in these companies has been through acquisitions, layoffs, and “cooked” books, but not from additional value in their products or services. However, in a free market economy, the job pays the maximum the market will bear.

Regardless of hierarchal position in the corporate structure, inflated value in wages and salaries, leads to inflated costs in all goods and services, originating from those corporations. It is a vicious cycle that is only sustainable in a closed economy, with limited outside influence. However, once factors such as globalization of economies begin, value is regulated by quality and price rather than production cost.

If it costs $10.00 to produce a good or service, after fair market markup it will certainly sell for more than $10.00. Now, if it costs only $1.50 to produce the same item, with equal or greater quality, it is possible to sell it for under $10.00, depending on other factors and the greed of the seller. Unless you are purchasing something only for prestige of a brand name, you are likely to purchase the item with the lowest cost and therefore lowest selling price. So now we’re back to making our purchases at Wal-Mart.

Like many of you, I am no proponent of off shoring. However, if you buy on price rather than country of origin, you are supporting off shoring. If you have lost your job and have limited resources, you are probably buying on price alone, regardless of the origin of the product. Realistically, you may have no other choice. This too has become another of those vicious cycles.

All of the politicians that favor off shoring also seem to be unable to find other sources of income for the jobless. Unlike government, we cannot participate in deficit spending for long. Eventually we have to pay our debts or lose our equity and assets.

Whose responsibility is it to provide jobs for those who are jobless due to off shoring? Is it government, or business? Or is it the employed or even the jobless themselves? The short answer is all of these, and yet none of these. Next time we’ll look at the government’s part in helping solve the dilemma of growing our economy while maintaining the standard of living for all U.S. citizens.

The commentary by Dr. Sennholz may be read at the following link. [i] http://www.dailyreckoning.com/Issues/2005/DR081605.html

© 2005 by David Posival, all rights reserved.

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